Share markets in retreat as North Korean missile test over Japan spooks investors

THE Australian share market has fallen sharply after North Korea fired a missile across Japan, in a dramatic escalation of regional tensions.

The Australian share market was down heavily in early trade on Tuesday following news of a North Korean missile flying over the northern Japanese island of Hokkaido.

THE Australian share market has fallen sharply after North Korea fired a missile across Japan, in a dramatic escalation of regional tensions.

The benchmark ASX 200 index was down 0.8 per cent to 5665.7 points in mid-morning trade, with the financial sector leading the losses.

CMC Markets chief market analyst Ric Spooner says the sell-off was sparked by North Korea’s test missile, which landed in waters off the northern Japanese island of Hokkaido early on Tuesday.

“What might have otherwise been a relatively muted move has turned into a fairly significant move down,” he said.

Mr Spooner said bank and other financial stocks are typically “in the firing line” which it comes to concerns about global stability.

The big four banks were down by between 1.1 and 1.5 per cent, with National Australia Bank the best performer and Westpac the worst.

Asian markets were also down heavily in early trade.

Explained: Why North Korea is stepping up its military provocations

Overnight Wall Street closed little changed, with investors concerned about the impact of Hurricane Harvey.

The hurricane’s whipsaw of wind and rain across Houston and the Texas Gulf Coast has caused large-scale flooding and forced oil refineries in the area to close, sparking a jump in petrol prices but leading US crude oil prices to fall to a one-month low on reduced refinery demand.

The local energy sector has fallen by 0.3 per cent overall, however Mr Spooner said the full impact the hurricane will have is yet to be seen.

In company news, vitamin maker Blackmores was up 4.1 per cent to $94.92 after its full-year profit tumbled 41 per cent to $59 million on the back of a decline in Australian sales — courtesy of lower local Chinese buying — but direct Asian sales improved.

Petrol retailer Caltex Australia was up by 2.6 per cent to $34.31 after it announced half-year net profit had slipped 17 per cent to $265 million, squeezed by a crude oil inventory loss and expenses associated with a franchise employee assistance fund.

Meanwhile, the Australian dollar has fallen against the greenback in the wake of the North Korean missile test, despite surging to a four-week high of US79.66c early on Tuesday.

The local currency was worth US79.3c at 11.30am.

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